“I am deeply ashamed and sorry for my actions,” said Lawrence B. Salander in March 2010 to a judge after confessing that he duped tennis star John McEnroe and many others of $120 million through “bogus art investments.” In October 2010, another American James Mobley was sentenced to five years in federal prison for selling art work purportedly made by Picasso, Dali, and Chagall. On March 24, 2011, the Mexican government confirmed that a Mayan art piece sold for $4 million was nothing but a fake. In fact, recently in September 2013, Glafira Rosales, an American dealer, was accused of being at the center of an $80 million art forgery scheme that duped dozens of experts and buyers. These in general summarise the pathetic state of the art industry globally, what to talk about India.

It is said that original art, artefacts and paintings that have recognised names behind them are generally independent of currency and economic cycles. Moreover, from the consumer’s point of view, antiques and arts could become an alternative investment proposition as well in terms of status symbol. But the art industry will never be able to reach respectable level in sales unless this industry brings in place extremely stringent processes and rules to ensure that the incidence of fraudulent transactions is done away with. To the benefit of the Indian art market, thankfully, some corporate houses are developing a hitherto hidden penchant for artefacts and paintings. And this penchant actually goes beyond being mere connoisseurs to taking an active business interest. Instances of the same include Godrej Group, RPG Enterprises and Emami Industries.

However, their interest is not without reason. With a robust economy, a new moneyed class and the energetic participation of young expats, Indians are boosting sales of contemporary Indian art to new highs. Buyers, mostly, comprise the blue eyed boys of India Inc., who buy the work for personal consumption and have no intention for further business with those works. For instance, the collections of Jerry Rao, Chairman of MphasiS BFL Ltd., are visible in the company’s offices worldwide.

The excitement for most of such collectors is palpable in the decor at their homes and offices; and as such, they really don’t focus on proper pricing or on proper insurance. No wonder, apart from public insurance companies, there are just a couple of other insurance companies (Tata-AIG, ICICI Lombard GIC Ltd., et al), which works on insuring art work. As a result, an adequate pricing mechanism for these masterpieces is yet to be done in India. “Art insurance is yet to catch up due to the challenge of valuation which may differ among different valuators. As insurers require the exact price of the asset, it usually becomes difficult to ascertain the sum insured applicable. Also, artworks such as paintings of sculptures require high maintenance in terms of the care taken and security, due to which insurers may be reluctant to take on this risk,” says a senior official at the underwriting division of Bajaj Allianz General Insurance. Interestingly, some experts estimate that the value of art that can be insured in India totals to about $1 billion. This has an estimated accretion of about 5% per annum. At these levels, they estimate the premium potential of the art insurance market to be about Rs.1.5-Rs.2 billion overall.

In addition, trading of art objects in India has been limited to just two metros (New Delhi and Mumbai) and mainly through auction houses. “Most of the time, these auction houses do not have the right basis of valuation and it lacks professionalism,” feels Surajit Hari, a leading photographer based out of Kolkata, who has done his exhibitions in cities like London and Cairo. What’s more? According to Delhi-based Indian Art Gallery, there are cases where art objects sold in auction houses are sourced from stolen properties.

Thus, with the entry of corporations, the growing confluence of business and creativity and its spin off benefits to both parties does provide some reason for hope. For instance, Kolkata-based Rs.30 billion Emami Group has acted as a catalyst towards pricing and auctioning the work of leading painters like M. F. Hussain, Ganesh Haloi and Satish Gujral.

The company claims that their investment in such businesses is soon to reach break even. “In fact, a few years ago, especially after one of our auctions of Hussain’s paintings, he personally called us to say that the insurance and pricing of his works was done very well,” confirms Richa Agarwal, Director of Emami Chisel Art. Yet, such relationships are limited only within the national boundaries, as getting an export license is very cumbersome here. We can’t expect a phenomenal growth in the business of paintings of modern artists who contributes approximately 50% of total business. Like, in London based Christie’s auction house, Tyeb Mehta’s Mahisasura minted an incredible $1.6 million; but most of Mehta’s other works could not manage essential formalities like export license, pricing, insurance et al.

Also, paintings of yesteryear painters are not properly insured most of the time. “That’s the reason why we have believed in working with those arts, where the entire pricing and copyright is protected by a governing institution,” elaborates Sanjeev Goenka, Director, RPG Group. For instance, all of Tagore’s work are governed by Visva-Bharati and RPG group has tied up with them for publishing and re-printing Tagore’s paintings a couple of times.

Although India's share in global art market is $250 million, i.e., less than 1% of the total global art market that is currently worth $60.8 billion, the Indian art market is definitely on an upswing and a recent report by Fortune claims that the Indian art market has risen over 485% in the last 10 years, making it the fourthmost-positive art market in the world.

The Indian art market is expected to touch the $1 billion mark by the end of 2013 – but most of this is hearsay computing. And of course, this industry was, is and will remain a haunt of the moneyed class, for whom it doesn’t matter whether the size of the industry is growing or not. For them, it’s just the thrill of the hunt. And for the remaining majority of the Indian population? Well, they’ll continue to invest in public provident fund any day over art work.